Things I’m Clueless About

I have these burning questions and no time nor sufficient interest/energy to research them. Maybe you guys know the answers… please enlighten me!

I have 4 credit cards: a Discover with a good interest rate and cashback bonuses, an American Express that contributes to my college’s alumni association, a Capital One visa with a crappy 19% interest rate (but it’s my oldest account), and an Old Navy store card. I don’t need all this credit. Is it better to:

(a) close the cards with the highest interest? (i.e. Capital One Visa and Old Navy?)

(b) leave the accounts open because closing cards reduces my FICO score (a la Suze Orman?)

(c) close the AmEx because, though it has the best interest rate, it has a ginormously high credit limit and it’s the newest card?

I’m saving for plastic surgery, which will hopefully take place in June. (I’ll get my first price quote on Jan 6th). Should I:

(a) just transfer funds to the “savings” portion of my regular bank account?

(b) set up one of those higher-interest online savings accounts (given that it has no fees), although we’re only talking about a 6-month savings period? My estimates show this would result in about $50 additional capital at the end of the savings period. Worth the headache?

(c) put it all under the mattress since all the banks are failing anyway

I’m on a fellowship from my University. I’m up to my neck in student loan debt, which I plan to pay off (or nearly pay off) using those fellowship funds. I’m also a few weeks shy of 27 and feeling this crazy urge to procreate. Should I:

(a) Be financially responsible and use every last fellowship cent toward student loan debt (unsubsized loans with higher interest first, working on down to subsidized loans with no interest)?

(b) Screw that, quit my job, have a baby and live on fellowship money while I finish school and worry about the loans later.

Haha! OK, I already know the answer to that one. NO BABIES FOR ME. Calm down ovaries, your time will come!

But seriously, on the first two… I have no idea!

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3 Responses

  1. I would close the higher interest rate accounts, but I’m no fan of Suze… I’m a big Dave Ramsey fan though! The reason I’d go ahead and close the accounts is because you already own a home… that alone does wonders for your credit score. You might want to space out the timing of closing the accounts though – one now and one six months from now.

    You know the best place we stash away money like that is through Pay Pal… they have free Money Market accounts and it’s nice to see the money grow a little while it’s sitting there… but it’s also in a place that you could get to it in an emergency – but it takes 3-4 days for it to transfer to your bank account… so it prevents you from spending it on hasty decisions.

    On the last one – my head says to stick with being financially responsible… but my real choice would be to HAVE that BABY! (But, then again, you know me… right?!)

  2. Just my two cents worth – (please bear in mind I’m from New Zealand so don’t know much about the credit system in the USA!)

    I’d definately get rid of the high interest cards – especially the Old Navy one (that’s a store card right?). Perhaps you could ask to have the AmEx limit reduced?

    I can’t really offer any solutions re where to deposit your money, in NZ our government has guaranteed bank deposits, so I would go for the safer option and chuck it in a bank, but I don’t know what’s going on over your way.

    Re having the baby – firstly you should do this BEFORE you have the plastics done – assuming your tummy is involved in this! You really don’t want to stretch out your nice new flat tummy by carrying a baby for 9 months.

    I work at a University in NZ and administer PhD students, and I know that those with kids find it a lot harder than those who don’t have kids – mind your our PhDs are solely research based, no taught component whatsoever. So I’d try and get the PhD done as quickly as you can, save money from the job, pay off the student loan, and then think about starting to get pregnant.

    As I said at the beginning, just my two cents worth, for what’s that worth 🙂

  3. An option to getting rid of the higher interest rate cards would be to call those companies and see if they will lower your percentage rate. I doubt Old Navy will but the other might. If they won’t, close those puppies down or at least pay them off and don’t use them unless you can pay them off in full at the end of each month (which I think can also be good for your credit score).

    Can’t offer you much with the savings situation. Not my area of expertise!

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